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  • Help with Roth IRA conversion

    I had a question about my tax situation regarding IRA.

    While I was in residency, a certain percentage of my salary was contributed (pretax) to Massachusetts State Retirement Fund.

    When I completed my 4 year residency in June of 2016 (I am currently in fellowship), I rolled over all of this money ($23,945 to be exact) to a traditional IRA, then subsequently converted that to a Roth IRA.

    Since it was initially a rollover to a traditional IRA, I'm guessing it doesn't count toward my contribution limit. But I'm guessing the conversion to Roth IRA would count towards my Roth contribution limit of $5,500? In which case, I've gone over the limit and I should recharacterize the excess contribution back to the traditional IRA to avoid penalty?

     

    Any advice would be greatly appreciated.

  • #2
    No, the conversion does not affect your annual TIRA or Roth IRA contribution. You are fine.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      That's good to hear, thank you.

      I filled out the 1099R form on Turbotax and it doesn't seem to tax me on the Roth conversion.

      Is there another form I should be filling out?

      Thank you again.

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      • #4
        You owe tax on the conversion of your pre-tax IRA of $23,945 to a Roth. Go back and check your input.

        Be sure to file a Form 8606 for your backdoor Roth conversion. This transaction will not be taxable unless you had any growth on the original nondeductible TIRA before you converted it to a Roth. Don't worry about reporting anything less than $1.

        Also recommend you leave the TIRA account open with your custodian, if possible, so you won't have to open a new account every year for the flow-through of funds for your TIRA.
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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